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Fitch downgrades Southern, Georgia Power on Vogtle risks, tax reform impacts

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Fitch downgrades Southern, Georgia Power on Vogtle risks, tax reform impacts

Fitch Ratings on Feb. 28 downgraded Southern Co. and Georgia Power Co., citing risks related to the construction of the Vogtle 3 and 4 nuclear reactors and weaker credit metrics.

The rating agency downgraded Georgia Power's long- and short-term issuer default rating to A-/F2, from A/F1, with a negative outlook which reflects funds-from-operations pressures caused by tax reform.

Southern's long-term issuer default rating was downgraded to BBB+ from A-, with a stable outlook, reflecting management's commitment to issue about $1.5 billion of equity annually over 2018 to 2022 to support credit metrics.

Southern is among several large utilities planning significant equity issuances in coming years to sustain credit metrics in the face of diminished operational cash flow resulting from the cut in the corporate tax rate, which could exert pressure on credit metrics.

Meanwhile, Fitch affirmed Mississippi Power Co.'s long-term IDR at BBB, with a positive outlook, following the resolution of all rate issues with the abandoned Kemper integrated gasification combined-cycle facility.